Self-Funded Group Health Insurance

Self-funded group health insurance, also known as Administrative Services Only (ASO), is a self insurance arrangement whereby an employer provides health or disability benefits to employees using the company's own funds. A self-insured employer will set up a special trust fund to earmark money (corporate and employee contributions) to pay incurred claims. It is also commonly known as self-funded employee health insurance.

In the self-funded group health plan, employers operate their own health plan. However, in the fully-insured group health plan, the employer contracts an insurance company to cover the employees and dependents. Employers choose to self-insure because it allows them to save the profit margin that an insurance company adds to its premium for a fully-insured group health plan. However, self-insuring exposes the company to much larger risk when more claims than expected must be paid.

Oracle Revenue Management and Billing (ORMB) supports the following types of self-funding approach:

  • Fully Self-Funded - In the fully self-funded approach, the employer retains all the risk and bears the claim costs irrespective of any limit.

  • Partially Self-Funded - In the partially self-funded approach, the employer purchases reinsurance or stop loss coverage to pass the risk to insurance company.

Oracle Revenue Management and Billing (ORMB) provides specialized methodologies for calculating claim amount with or without markups, enrollment fees, claim fees, specific stop-loss credits, aggregate stop-loss credits, non-recurring or recurring flat fees for covered services, network discounts, and fixed or enrollment based premium funds. Once the charges are calculated, the system bills the amount to the employer (known as the parent customer in ORMB) or to its logical designed billing entities (known as the bill groups in ORMB).

Oracle Revenue Management and Billing (ORMB) enables you to use the pricing methodologies and the billing engine for the self-funded group health insurance business. To design the pricing and billing models for the self-funded group health insurance business, you need to create the following entities in ORMB:

  • Parent Customer

  • Bill Groups

  • Bill Group's Account

  • Self-Funded Policy

  • Price Items (for each covered service in the policy)

  • Pricing Rule Types

  • Pricing Rules

Parent Topic: Oracle Revenue Management and Billing Insurance Business Processes